Insurers Revive Child-Only Policies, But Cost Is Still An Issue

Child-only policies can be critical to some families, including those where an employer doesn't offer dependent coverage.

iStockphoto.com

Health policies for kids are back, now that heath insurers who stopped selling them after the health care overhaul passed are reopening shop, according to a recent report from the Commonwealth Fund.

Under the 2010 law, insurers were prohibited from denying coverage to children under age 19 because they had pre-existing medical conditions. Faced with the prospect of being required to insure sick kids on demand who might need lots of pricey medical care, many insurers simply stopped selling so-called child-only policies on the individual market.

Although a small segment of the market, child-only policies can be critical to some families, including those where an employer doesn't offer dependent coverage or in cases where older adults who are on Medicare are raising children or grandchildren.

Now the tide appears to have turned. Since the health law was enacted, 22 states and the District of Columbia have passed laws or regulations that encouraged insurers to begin selling child-only policies again, the study found.

Strategies varied. Some states made selling such policies a condition of being allowed to offer other individual plans. Others established defined open enrollment periods during which the policies are sold as a way to discourage parents from waiting until a child is sick to buy coverage.

But even though the policies are available, that doesn't mean they're affordable. California is the only state that set any limits on how much the insurers can charge for the policies.

"Ours was the most aggressive and far-reaching of these reforms" to bring insurers back into the child-only market, says Anthony Wright, executive director of Health Access California, whose organization worked on the bill that established a cap on premiums.

Under the California law, as long as someone buys during the annual open enrollment period, which coincides with the child's birthday month, the insurer can charge no more than twice the amount for a policy than it would charge for a typical healthy child. If someone buys outside the designated timeframe, however, there are no rate restrictions.

Other states don't address premiums. A Georgia law takes effect in January that requires any insurer that sells individual policies in the state to also sell child-only policies. But there are no restrictions on how much insurers can charge for them.

"We would have liked the bill to be stronger, not necessarily allowing complete medical underwriting," says Cindy Zeldin, executive director of Georgians for a Healthy Future, who worked with other child advocate organizations to draft the bill.

The affordability issue may be short-lived. Starting in 2014, insurers will no longer be able to take health status into account when setting health insurance premiums for anyone, child or adult.